India To Miss 2022 Renewable Energy Target By 42%, Says CRISIL

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India is unlikely to produce 175 gigawatts of renewable energy by 2022. In fact, it will miss the target by 42 percent. That’s according to a note by CRISIL Ltd., which cites regulatory challenges and policy flip-flops, amid record-low renewable power tariffs, as reasons for the shortfall. The industry is also witnessing waning interest from developers for over a fiscal now. Recently, at the UNGA global climate summit in New York on Sept. 23, Prime Minister Narendra Modi made a pledge to more than double India’s renewable energy target to 450 GW.

On Sept. 16, Union Minister Harsh Vardhan said India is on track to achieve its renewable energy target by 2022, as set by the Modi government. “Renewable energy capacity may increase by just 40 GW to 104 GW in 2022 from 64.4 GW in 2019, thank s to the lingering policy uncertainty and tariff glitches. That would be a good 42 percent short of the government's renewable energy target of 175 GW," the ratings and research gency said in the note.

According to the CRISIL note, 26 percent of the 64 GW renewable energy projects auctioned by the central and state governments have received no or lukewarm bids, while another 31 percent are facing delays in allocation after being tendered.

Thus, despite the increase in tendering volume, not only has allocation of renewable energy projects slowed down, but both undersubscriptions and cancellations of awarded tenders have also increased, CRISIL said.

The ratio of auctioned or awarded projects to tendered projects plunged to 34 in 2018 -19 from 77 over FY16 and FY17.

"The unstable policy environment poses big risks for the renewable energy targets. This is evident in the growing incoherence between the policy thrust on the one hand, and the actual action by implementation agencies on the other," it says.


As of July 2019, Andhra Pradesh discoms alone owed Rs 2,600 crore to developers, part of which was due to ongoing tariff dispute and the resultant delays in payments. Such prolonged payment delays and disputes not only set a negative precedent, but also put at risk existing and planned investments, the agency said.


Similarly, Rajasthan's new draft solar and hybrid policy proposes an additional annual levy of Rs 2.5-5 lakh per MW on all projects that sell power to entities outside the state. "Should this be implemented, it could be highly detrimental for the growth the sector, given that Rajasthan is one of the most sought-after states for solar power plants," CRISIL said. A cap on tariffs is also emerging as a new challenge for developers.

Source:- Blombergquint